Regional bank prices $700m RMBS transaction

One of Australia’s regional banks has successfully priced a $700 million RMBS transaction.

Bendigo and Adelaide Bank said the 'TORRENS Series 2016-1 Trust' RMBS transaction will be upsized from $500 million to $700 million.

The TORRENS Series 2016-1 Trust, which was launched on 8 August 2016, is the bank’s latest mortgage backed securities issue under the TORRENS securitisation program.

NAB was the arranger for the transaction, and joined ANZ, CBA and Macquarie Bank as joint lead managers for the transaction.

The upsized pricing of the RMBS transaction comes after the bank recently reported positive home loan growth over the 2016 year, although record-low rates are beginning to squeeze its margins.

The bank reported underlying cash earnings of $439.3 million over the 12 months to 30 June, a 1.6 per cent increase on the prior corresponding period, and grew its mortgage book by 4 per cent to $39.8 million over the year.

In a trading update, the non-major noted that the RBA’s historic rate cut earlier this month will have an impact on the profitability of its home lending: “August price changes aim to deliver neutral margin outcome following recent cash rate reductions”.

Bendigo’s managing director, Mike Hirst, noted that lending growth accelerated in the second half, with costs well-managed in an “unprecedented low interest rate environment”.

Bendigo and Adelaide Bank only passed on 10 basis points of the RBA’s 25 basis point cut to mortgage customers.

[Related: Bank bolsters distribution but margins under attack]

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Francesca Krakue

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